RBA Rate Cut Decision
On Tuesday 3 November 2020, the RBA announced a package of support measures to support job creation and recovery to the Australian economy from the pandemic.
As widely expected, the official cash rate has been cut by 0.15% to a historic low of 0.10%.
Other elements of the package are as follows:
- a reduction in the target for the yield on the 3-year Australian Government bond to around 0.1%
- a reduction in the interest rate on new drawings under the Term Funding Facility to 0.1%
- a reduction in the interest rate on Exchange Settlement balances to zero
- the purchase of $100 bn government bonds of maturities of around 5 to 10 years over the next six months.
The cash rate cut is the sixth rate reduction over the 18 months, following the two consecutive rate cuts in March and April 2020.
The support measures announced are expected to assist the recovery by lowering financing costs for borrowers, contributing to a lower exchange rate, and supporting asset prices and balance sheets. On the other hand, the Term Funding Facility is contributing to low funding costs and supporting the supply of credit to the economy.
The RBA rate move is expected to lower the structure of interest rates and provide the certainty that Australians can borrow over the long term at historically low rates.
Read the full RBA Statement here. Listen to the Press Conference webcast here.
How have the major banks responded?
The major banks (CBA, ANZ, NAB, Westpac, St George and Macquarie) have reflected the RBA move in their interest rate settings, offering home loans customers with lower fixed rates, while keeping variable base rates unchanged.
Small and medium business owners will also benefit from the reduction of rates on a number of small business loans under the government’s guarantee loan scheme.
For home loan customers, fixed rates for four-year terms are now in the sub-2% territory, giving certainty and confidence into the future.
Here is a summary of the rate changes announced by the major banks for customers who are on a package product.
CBA
For owner occupier home loans on P&I repayments, CBA is reducing:
- One-year fixed rates by 0.10% to 2.19% pa
- Two- and three-year fixed rates by 0.15% to 2.14% pa
- Four- year fixed rates by 1.00%, to 1.99% pa.
Effective date: 11 November 2020 for new loans
ANZ
The bank is reducing home loan rates for owner occupiers paying P&I on:
- One-year fixed rate loans by 0.30% to 2.09% pa
- Two- and three- year fixed rate loans by 0.20% to 2.09% pa
- Four- and five- year fixed rate loans by 0.40% to 2.29% pa
Effective date: 5 November 2020
NAB
NAB is reducing home loan rates for owner occupiers paying P&I on:
- One- and two- year fixed terms by 0.10% to 2.19% pa and 2.09% pa respectively
- Three-year fixed term by 0.20% to 2.09% pa
- Four-year fixed term by 0.81% to 1.98% pa
Effective date: 10 November 2020
Westpac & St George
In similar structures, for owner occupier loans with P&I repayments, Westpac and St George are reducing:
- One-, two- and three-year fixed rates by 0.20% to 2.09% pa
- Four-year fixed rates by 0.80% to 1.99% pa
Further rate concessions are available for LVR tiers for new loans.
Effective date: 9 November 2020
Macquarie
Macquarie is reducing the rates for:
- ALL fixed rate loans by 0.10%.
- While the reduction for four- and five-year fixed rate loans is 0.25%
Effective date: 11 November 2020 for new loans
ING
For owner occupier loans with P&I repayments and Orange Advantage at 80% LVR or less, ING is reducing:
- One-year fixed rates by 0.15% to 2.19% pa
- Two-year fixed rates by 0.10% to 2.09% pa
- Three-year fixed rates by 0.30% to 2.04% pa
- Four-year fixed rates by 0.60% to 1.99% pa
- Five-year fixed rates by 0.40% to 2.19% pa
Effective date: 13 November 2020
How does the rate changes impact me?
This is indeed a very interesting time for the mortgage market. Get in touch now with our team or email us on if you want to find out how you can benefit from the recent RBA rate cut.
Read our next article for more commentary on the latest RBA rate cut and what it means for you.